Hon. Anne McLellan (Minister of Natural Resources)

Mr. Speaker, I am proud to present the first annual report on the administration and application of the Energy Efficiency Act.

By promoting energy efficiency and alternate energy my department will help increase economic competitiveness by lowering energy bills and reducing the environmental impacts associated with energy use.

This report notes a variety of important departmental activities which integrate economic and environmental objectives. Through my department's programs and initiatives the Government of Canada is working in partnership with business to promote energy efficiency.

I will use these initiatives as a base for a more co-ordinated program with higher visibility among Canadians. Energy efficiency is widely recognized as the best short term strategy to achieve our economic and environmental goals. I have encouraged an expansion of voluntary action programs within both government and the private sector.

We are working with the provinces and the Canadian Federation of Municipalities to reduce duplication and expand the scope of these programs, and we are participating in initiatives to encourage fuel efficiency in transportation fleets and residential energy retrofits.

I encourage all members of this House to support the gradual direction in which Canada is moving for the sake of greater energy efficiency.

Ms. McLellan

Two minutes.

Ms. McLellan

Mr. Speaker, these last two points I have raised only begin to scratch the surface of my department in terms of its importance in the development of Canada's science and technology expertise.

I can assure members of this House that Natural Resources Canada is committed to greater efficiency in its operations in order to maximize its contribution to Canada's science and technology capabilities which are key to our future prospects for economic growth and job creation.

In closing, as the member for Edmonton Northwest and Minister of Natural Resources, I urge this House to fully support the announcements my colleague the hon. Minister of Finance has made concerning this government's first budget.

Canada faces serious challenges as we move together toward the next century. I believe these measures provide an extremely positive and useful series of first steps to get this country on the road to a more competitive standing in global markets and to get Canadians back to work.

Much has been said about this government's commitment to the concept of sustainable development. It is clear we must move carefully to achieve a balance in decision making between environmental and economic objectives.

At this time our movement toward sustainable development must progress carefully. We know very well that the wrong signals to the marketplace will have a drastic effect on our ability to encourage environmental sensitivity. All Canadians must work to balance environmental and economic objectives. It is that simple.

In conclusion this budget will rekindle that confidence. It is the kind of confidence this country needs to get hundreds of thousands of Canadians back to work and to fulfil their desire to make a positive contribution to the future of this great nation.

Ms. McLellan

Mr. Speaker, in relation to the infrastructure program and small businesses, small businesses will create jobs. What do small businesses need to create those jobs-renovated and rebuilt infrastructure. They need good public transportation, good roads, good sewer systems, cleaner air. That is what they need to compete with their competitors around the world.

It is interesting that our major global competitors, Germany, Japan and the United States, are contributing billions and billions of dollars over the next 10 years to renovate their public infrastructure. Why? They know it is a public responsibility to provide the foundation, the bricks and the mortar, so businesses can then do the job they do best which is to create wealth and put people back to work.

That is why this government, with its commitment to long term thinking, is making this short term commitment to the renovation of this country's infrastructure.

Hon. Anne McLellan (Minister of Natural Resources)

Mr. Speaker, I am pleased to rise today in support of the first budget of this government announced on February 22 by my colleague, the hon. Minister of Finance.

This budget deserves the support of this House because it provides a solid framework which will both stimulate economic growth and set the course for long term fiscal restraint and responsibility. As the member for Edmonton Northwest, I am very encouraged by this budget. It addresses those issues that the residents of my riding raised with me during the election, issues of job creation, deficit reduction and meaningful reforms to Canada's social programs.

In addition, there are several announcements concerning the activities of my department, Natural Resources Canada, that I wish to highlight.

First I wish to discuss aspects of the budget which affect my constituents in the riding of Edmonton Northwest. The unemployment rate in Edmonton Northwest is high. However, with this budget the government will help restore hope and prosperity not only to the residents of Edmonton but to all Canadians.

A key component in restoring this hope and prosperity will be the creation of jobs by the private sector. In my riding as in many others these jobs will be created primarily by small businesses.

For example, mine is a riding of small businesses. There are over 5,000 such businesses creating employment in my riding.

This budget recognizes the importance of small business, supports its further growth and encourages its natural creativity and initiative. For example we have cut back on premiums for unemployment insurance. That will save businesses $300 million a year which they can now reinvest in new jobs. The government will consult with banks for the first time to develop a code of conduct for small business lending.

The budget also creates Canada business service centres in every province to facilitate contact with our government. It establishes the Canada investment fund to streamline badly needed access to venture capital for small enterprises.

In addition this budget addresses the badly needed reform of our social programs. Our social security system was designed for a different era and no longer meets Canadians' needs. We have hundreds of thousands of Canadians who are unemployed, underemployed or stuck on social assistance, who see unfairness and disincentives in the system and who live in poverty.

We will undertake this reform of Canada's social programs through a wide ranging process of consultation involving other levels of government, the private sector, members of Parliament and their constituents. There will be numerous opportunities over the next few months for constituents in Edmonton and elsewhere to participate in this process and I encourage them to do so.

Now I would like to turn to another key component of the budget, deficit reduction.

As stated by my colleague, the Minister of Finance, the budget reduces the deficit from $45.7 billion in 1993-94 to $39.7 billion in 1994-95 and $32.7 billion in 1995-96. In terms of spending cuts this is the most significant budget we have seen in this country in 10 years.

One of the key components of the deficit reduction program is major cuts in defence spending, some $1.9 billion over the next three years. The budget contained the announcement that 21 defence facilities across Canada would be closed or restructured. While these decisions were not easy they are an example of the tough choices this government has promised to make to get our spending under control.

In Alberta alone the net saving which will be achieved through cuts in defence spending is approximately $44 million annually. We in Edmonton with a proud and long military tradition know that we must do our part to ensure an efficient and effective yet streamlined military force.

At CFB Edmonton several operations will be transferred out, including the search and rescue squadron to Yellowknife and the air transport squadron to Trenton and Winnipeg. These and other operational changes will result in a net saving of approximately $36 million annually.

At the same time the Lord Strathcona Horse Brigade will be transferred from CFB Calgary to CFB Edmonton. By reducing the transit time to the main training area for these troops at Camp Wainwright and by closing the Harvery barracks, this move represents a saving of $6 million annually to taxpayers. In addition, the closure of CFB Penhold will achieve another $2 million in annual savings.

The government believes that our defence infrastructure has far exceeded for many years any probable and reasonable defence needs. The announcements of reductions reflect the realities of the nineties that with the end of the cold war Canada's military presence must be rethought and reconfigured.

The budget also focuses on achieving greater equality in social conditions for all Canadians. In this budget we see investments made in women's health care issues, the well-being of children, young Canadians and aboriginal peoples. These issues are very important to me as they are to many in my riding.

I am very pleased to note several announcements which follow from our promises to Canadians in the red book. The budget provides funding for a centre of excellence for women's health, a prenatal program for low income pregnant women, an aboriginal head start program, a new youth service corps and youth internship and apprenticeship programs.

I believe these programs are long overdue in terms of responding to the needs of these groups and individuals. The introduction of these initiatives demonstrates that this government is committed to the equality of all Canadians.

Further, these programs represent a key step toward meeting the challenge which the Minister of Finance identified in his budget speech, the challenge to construct responsible social programs which are affordable.

Several aspects of the Minister of Finance's announcements will have a direct effect on the women of this country. For example, I would like to note that the package of reforms to the unemployment insurance program will help the women of Canada. As the Minister of Finance said, it is often women who bear the brunt of social stress and economic dislocation.

He said that during our budget consultations a number of issues were raised regarding disparities in the tax and income support systems.

Specifically, while the unemployment insurance benefit rate will be reduced to 55 per cent, the rate will be 60 per cent for individuals with modest incomes who support children or older parents. Many of those people are single mothers. There will be amendments to the provisions governing workers who quit their jobs voluntarily or are fired for misconduct. This acknowledges the concerns of the many women who voice their opposition to

the introduction of these provisions by the previous government.

Furthermore, I am very pleased to note that the Minister of Finance announced that he will act on the recommendations of the federal-provincial family law committee which has been studying the issue of tax treatment of child support payments and the related issues of their levels and enforcement.

While these measures respond to the specific needs of Canadian women, they also respond to the pressing need to reform Canada's outdated social security system to ensure that system builds bridges to work and that system encourages independence, not dependence.

The Minister of Finance also discusses in the budget a number of measures which will create economic renewal and revitalization, including the infrastructure program. In Alberta total investment in infrastructure development and enhancement and job creation will be $518 million. The creation of both short and long term employment, particularly in centres with high unemployment such as Edmonton, comes as welcome news.

Moreover, the infrastructure program will improve national, provincial and local competitiveness and help promote improved environmental quality.

For example, I know that the Edmonton city council is considering a number of projects, including the construction of a major roadway interchange along a truck route, improvements to the Gold Bar Wastewater Treatment Plant and the extension of its river valley park system.

Such programs will help to ensure that Edmonton not only remains a good place to conduct business, but also that its citizens continue to enjoy a high quality of life.

I have addressed some aspects of the budget which directly affect my constituents in Edmonton Northwest. Now I would like to turn to issues which deal with my responsibilities as Minister of Natural Resources.

Let me emphasize the fact that Canada's natural resource sectors are industrial cornerstones of Canada's economy. Through our general economic policies and the work of my department this government is committed to ensuring that the energy, mining and forestry sectors continue to provide jobs for Canadians, stimulating the economies of hundreds of communities in all regions of this nation and continuing to contribute to Canada's positive balance of trade.

Before I discuss specific budget announcements affecting these industrial sectors I would like to address two key concerns identified by Albertans in discussions leading up to this budget. First, the federal government's acting unilaterally to impose a carbon tax was of great concern to some Albertans prior to the budget speech. The Minister of Finance did not impose a carbon tax.

In addition, the Minister of Finance did not reduce tax rebates for privately owned utilities.

One of the things this new government will accentuate is a partnership approach with all key stakeholders such as other levels of government, industry, labour, et cetera. Gone are the days when governments could impose solutions without consulting with those who will be most affected.

The goal of the Public Utilities Income Tax Transfer Act, also known inelegantly as PUITTA, is to reduce interprovincial tax disparities and provide a balanced playing field for crown and investor owned utilities and their customers wherever they are located in Canada.

The principal beneficiaries of PUITTA are those provinces with investor owned utilities of which Alberta, Nova Scotia and Prince Edward Island are the main examples. Under the PUITTA legislation the federal government rebates 85.5 per cent of the federal income taxes paid by investor owned utility companies back to the provinces.

The government is not abolishing PUITTA but merely extending the current restraint on its growth. Albertans are not being targeted. Their utilities receive better treatment from the federal government than from their own provincial government.

In 1990 the Alberta government abolished its own equivalent of the federal PUITTA program.

I would like to turn now to the changes affecting class 34, capital cost allowances. First, I should explain that class 34 allowed the right-off of certain equipment used in co-generation, the recovery of waste heat and renewable energy, including active solar heating, small hydro, energy from wood and municipal wastes and wind energy.

In this budget class 34 has been eliminated and we have created a new and expanded class. Class 34 was created in 1976 and was designed to encourage business and industry to reduce energy waste and use renewable energy sources.

On the energy efficiency side many of the standards used under class 34 were based on the technology of the seventies. Since the purpose of the tax write-off mechanism is to encourage the use of leading edge technology the standards needed to be revised, and accordingly the new class does just that.

On the renewable energy side we have created a new class that now has expanded to include three new renewable energy sources. Photovoltaic energy, geothermal energy for electricity

production and methane from landfill sites and sewage treatment facilities are now included in the new class.

The initiatives under this new class will contribute to the government's greenhouse gas emission objectives. In addition, the government is examining a variety of measures under the national air issues co-ordination mechanism. This examination includes several measures to increase the use of renewable energy in Canada.

There has been criticism about the fact that this budget does not do anything to improve the prospects for mineral exploration in Canada. First of all, the Liberal Party of Canada was the only federal party to have a platform on mining during the election campaign.

Let me also point out that this budget was one of the first in years to address the concerns of the mining and mineral industry in this country. The tax changes concerning mine reclamation, which I will discuss in a few moments, prove that this government is committed to the future of this industry in Canada.

The mining policy mapped out by my party notes the serious economic implications of Canada's declining ore reserves due to inadequate grass roots exploration. The Minister of Finance has listened carefully to my concerns regarding the ore reserve and mineral exploration issues.

He has also carefully considered concerns registered by organizations such as Save Our North, the Prospectors and Developers Association of Canada and various regional prospectors and developers associations. However, the government's immediate agenda for taking action to stimulate mineral exploration and other desirable economic activity must take into account constraints imposed by the country's current fiscal situation.

I should also point out that this issue is being examined through a consultative process called the Whitehorse mining initiative. This initiative, as I know members are aware, is driven by industry and includes federal, provincial and territorial governments, native peoples, environmental groups and other related stakeholders.

Mining has been a significant factor in this country's economic growth since before its very inception. As I mentioned earlier, the mining industry has demonstrated its commitment to Canada through the development of the Whitehorse mining initiative. Late last September the industry launched an impressive public information campaign called "Keep Mining in Canada" which my department enthusiastically supports.

In this campaign's ten point plan the industry called on government to change the tax laws on mine reclamation funding to encourage investment in new mines. Briefly, mine reclamation is the process of decommissioning and rehabilitating mine sites following closure and the termination of production. It involves restoring the site to the same or better state than existed prior to the development of the mine. As I am sure members can appreciate, this often costly process supports our commitment to sustainable development.

By bringing in changes to the mine reclamation tax fund regulations, the Minister of Finance has created greater equity in the tax system. The government has taken a position that is fair to both small and large companies. Smaller single mine companies are put on a level playing field with large mining corporations.

With the new measure such small companies will be able to take the deduction up front to the extent that they are required by provincial governments to make payments into mine reclamation funds.

In short, the measure the Minister of Finance has taken is good for environmental protection. It has brought greater equality into the income tax system and has increased the cash flow of large and small mining companies.

This measure also represents an annual investment of about $15 million by the Government of Canada in our mining industry. I believe this measure addresses some of the concerns raised by the Keep Mining in Canada campaign. It also supports the improvement of the investment climate without doing something which could prove to be fiscally imprudent.

I should add the perception that this new measure creates a system of double taxation for mining companies is false. While fund earnings are taken into taxable income twice, there is a corresponding deduction for the amount of reclamation expenses. Therefore in reality tax is paid only once on the fund earnings.

Finally I should emphasize several measures announced by the Minister of Finance which have positive benefits for client sectors of Natural Resources Canada.

As I mentioned earlier the reduction of UI premiums is estimated to provide businesses with some $300 million to put people back to work. I believe this will spur job creation in small businesses engaged in energy, mining and forestry activities throughout this country.

The establishment of the youth corps is also expected to provide young Canadians with the opportunity to gain valuable on the job experience in our forestry sector. The apprenticeship program will enable other young Canadians to get valuable experience in all three sectors supported by my department.

The technology network represents a first step toward improving the linkage between federal government research and development institutes, universities and the private sector. That linkage will be extremely important as every country in the world seeks to set up electronic highways to improve its competitive edge.

Besides the potential increase in demand for forestry products the residential rehabilitation assistance program may also increase demand for energy efficient products that have been

developed by industry in co-operation with my department's research and technology arm, CANMET.

The redefinition of Canada's involvement in space will boost our commitment to the continued development of Canada's expertise in remote sensing. As members know the Canada Centre for Remote Sensing which is a division of the surveys, mapping and remote sensing sector of my department was almost single-handedly responsible for the push in the early 1970s to develop our expertise in the field of space.

Mr. Speaker, I see that my time is almost up.